Japan posts record US$83.4bn trade deficit

AP and Reuters, TOKYO

Fri, Apr 19, 2013 - Page 15

Japan’s trade deficit rose to a record US$83.4 billion in the last fiscal year, as exports faltered despite the weakening yen and costs for imported gas and crude oil rose.

Japanese customs figures released yesterday also showed a deficit for last month for the ninth month in a row of ￥362.4 billion (US$3.7 billion), down from February’s gap of ￥779.5 billion.

Exports rose 1.1 percent last month from a year earlier, after a dropping 2.9 percent in February. However, in the fiscal year ended last month, exports fell 2.1 percent from the previous year to ￥63.9 trillion while imports rose 3.4 percent to ￥72.1 trillion. The deficit of ￥8.17 trillion was up 84 percent from the previous fiscal year’s ￥4.4 trillion shortfall.

A sharp depreciation in the Japanese currency since late last year has failed to fully offset weak demand for Japan’s exports as shipments to China have suffered from a flare-up in tensions over a territorial dispute.

Meanwhile, the weaker yen means higher costs for rising imports of natural gas, which is priced in US dollar terms, to help compensate for the loss of nuclear power generation capacity after most atomic power plants remain closed after the 2011 disaster at the Fukushima Dai-ichi nuclear power plant in northeastern Japan.

So far, the trade balance has gone increasingly into deficit as import costs have risen, though the inflows of earnings from the massive overseas investments made by Japanese corporations have ensured that Japan’s current account remains positive.

“The broad picture remains intact as the weaker yen is having more of an impact on boosting imports than exports, while the recovery in the world economy — particularly China — is tepid,” said Takeshi Minami, chief economist at the Norinchukin Research Institute in Tokyo.

“We’ll need to wait at least until around summer before the weaker yen enhances price competitiveness of Japanese products abroad to boost exports,” Minami said.

Analysts say it takes time for the yen’s slide to boost exports, while it immediately boosts import costs, weakening the trade balance. Still, the weak yen is boosting business morale.

The monthly Reuters poll, which is closely correlated with the Bank of Japan’s quarterly t ankan corporate survey, showed that manufacturers’ sentiment index rose by seven points to minus-four this month and was expected to improve to plus-10 in July.